EDITORIAL: Companies going green not in Eskom’s best interest
The government is not keen to allow third parties to generate their own energy as it will accelerate Eskom’s death spiral
The crisis at Eskom that forced SA’s underground mines to shut down put the spotlight squarely on the government’s inability to allow third parties to enter the electricity generation space.
Large and small mining companies in SA have submitted applications to the national energy regulator and Eskom, the state-owned power monopoly, for solar projects to supply their operations.
Business Day has recorded the frustrations of CEOs at Gold Fields, Anglo American Platinum, Sibanye-Stillwater, Harmony Gold and Orion Minerals to name a few when it comes to the progress of these applications. The universal feedback is that these requests have stalled and there appears to be no will at any level to advance them.
For the stability of the national grid, having large users able to source part of their energy needs from renewable sources brings a number of benefits.
First, it frees up constrained power and would allow Eskom to do proper, sustainable fixes on its ageing, unreliable fleet of power plants that have 45GW of capacity but are running at about half that. At the moment Eskom is reactive to failures at its power plants and is barely coping to keep the lights on.
Second, it eases the burden of carbon tax for mining companies, which in SA don’t really need an additional expense that flows into the fiscus that is being robbed blind by corruption and incompetence.
Third, it reduces mining companies’ exposure to the six-fold increase in electricity prices in little more than a decade and which have not resulted in improved electricity supply. To the contrary, electricity supply is as precarious if not more so than 11 years ago when Eskom plunged the country into a crisis.
However, for a state-owned entity, having its biggest clients moving to cheaper, more reliable power sources is the least favourable outcome.
Eskom has R450bn of debt that it can barely service let alone fund its operating costs. To have major sources, turned off by irregular supplies and exorbitant price increases, leave the grid will leave Eskom with non-paying customers and accelerate its death spiral.
It’s a complex mess brought on by the deployment of inept, unskilled and eminently unsuitable political stooges to the upper echelons of Eskom management. That there was corruption and malfeasance at the new power plants Medupi and Kusile, which are both tens of billions of rand over budget and years overdue, is a given.
As this government favours commissions of inquiry instead of addressing corruption head on and forcing consequences on its governing party members, President Cyril Ramaphosa should call for such a commission into the debacle that is Eskom.
The country’s economy and the wellbeing of 57-million people hang on the power utility. That it has been allowed to deteriorate to such an extent that there are unprecedented power cuts of 6GW, stopping heavy industry in its tracks, is a national crisis of a proportion few in the government appear willing to concede.
Tough decisions are needed on Eskom that will undoubtedly alienate the ANC’s alliance partners in labour and the SA Communist Party. These decisions are of national importance and transcend the internal politics and comfort of the ANC, which has sunk the country to its lowest levels in decades.
The other politically risky task is to force the payment to Eskom of billions of rand from municipalities and areas such as Soweto, where non-payment is rife. In municipalities, money is squandered on local government perks instead of fixing and maintaining infrastructure and paying for national services, such as Eskom.
The ill-discipline at this level and self-serving interest has been allowed to fester by the ANC’s leadership and now the consequences must be faced.
Business Day has long argued that the country’s economy would be well served by the government getting out of the way instead of meddling and micromanaging at every level, impeding sensible, quick solutions to some of the basic underlying problems besetting SA.
Eskom is just one example.
Industry is willing to step in, reduce demand on the grid with renewable power solutions, freeing up electricity for the greater economy, allowing the start of new businesses if there is a surplus of power as the country had two decades ago.
It takes political will and tough, pragmatic decisions that run counter to the ANC’s internal policies that have proved woefully inadequate and outdated.